Energizer 2007 Annual Report Download - page 29

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Energizer Holdings, Inc. 2007 Annual Report
Impairment of Long-Lived Assets The Company reviews long-
lived assets, other than goodwill and other intangible assets for
impairment, when events or changes in business circumstances
indicate that the remaining useful life may warrant revision or that
the carrying amount of the long-lived asset may not be fully recov-
erable. The Company performs undiscounted cash flow analyses to
determine if impairment exists. If impairment is determined to
exist, any related impairment loss is calculated based on fair value.
Impairment losses on assets to be disposed of, if any, are based on
the estimated proceeds to be received, less cost of disposal.
Revenue Recognition The Company’s revenue is from the sale of
its products. Revenue is recognized when title, ownership and risk
of loss passes to the customer. Discounts are offered to customers
for early payment and an estimate of such discounts is recorded as
a reduction of net sales in the same period as the sale. Our stan-
dard sales terms are final and returns or exchanges are not permit-
ted unless a special exception is made; reserves are established and
recorded in cases where the right of return does exist for a particu-
lar sale. The Company offers a variety of programs, primarily to its
retail customers, designed to promote sales of its products. Such
programs require periodic payments and allowances based on esti-
mated results of specific programs and are recorded as a reduction
to net sales. The Company accrues at the time of sale the estimated
total payments and allowances associated with each transaction.
Additionally, the Company offers programs directly to consumers
to promote the sale of its products. Promotions which reduce the
ultimate consumer sale prices are recorded as a reduction of net
sales at the time the promotional offer is made, generally using
estimated redemption and participation levels. Taxes we collect on
behalf of governmental authorities, which are generally included in
the price to the customer, are also recorded as a reduction of net
sales. The Company continually assesses the adequacy of accruals
for customer and consumer promotional program costs not yet
paid. To the extent total program payments differ from estimates,
adjustments may be necessary. Historically, these adjustments have
not been material.
Advertising and Promotion Costs The Company advertises and
promotes its products through national and regional media and
expenses such activities in the year incurred.
Reclassifications Certain reclassifications have been made to
the prior year financial statements to conform to the current
presentation.
Recently Issued Accounting Pronouncements In 2006, the FASB
issued FASB Interpretation No. 48, “Accounting for Uncertainty in
Income Taxes” (FIN 48). FIN 48 clarifies the treatment of uncer-
tain income tax positions in accordance with FASB Statement No.
109, “Accounting for Income Taxes.” The interpretation prescribes
a recognition threshold and measurement attribute for the finan-
cial statement recognition and measurement of a tax position
taken or expected to be taken in a tax return. It also provides
guidance on derecognition, classification, interest and penalties,
accounting for taxes in interim periods and disclosure require-
ments. FIN 48 is effective for the Company on October 1, 2007.
The Company does not expect the impact of adoption of FIN 48
to be material.
On October 1, 2006, the Company adopted SFAS 155,
“Accounting for Certain Hybrid Financial Instruments, an amend-
ment of FASB Statement No. 133 and 140” (SFAS 155). SFAS 155
permits, among other things, an election to record hybrid financial
instruments that contain an embedded derivative at fair value
rather than bifurcating the instrument for accounting purposes, as
required by previous standards. The Company has elected such
treatment for its prepaid share option. See Note 13 for further
information on financial instruments.
In September 2006, the FASB issued SFAS No. 157, “Fair Value
Measurements” (SFAS 157), which addresses how fair value should
be measured when required for recognition or disclosure purposes
under GAAP. It also establishes a fair value hierarchy and will
require expanded disclosures on fair value measurements. On
November 14, 2007, the FASB voted to partially defer the require-
ments of this guidance for one year making SFAS 157 effective for
the Company on October 1, 2009. The Company has not com-
pleted assessing the impact that SFAS 157 will have on the
Consolidated Financial Statements.
In September 2006, the FASB issued SFAS No. 158, “Employers'
Accounting for Defined Benefit Pension and Other Postretirement
Plans – an amendment of FASB Statements No. 87, 88, 106, and
132(R)” (SFAS 158). SFAS 158 requires employer to recognize the
overfunded or underfunded status of a defined benefit pension
and a postretirement plan as an asset or liability in its balance
sheet. The changes in funded status in that year are required to be
reported through other comprehensive income. SFAS 158 was
adopted by the Company on September 30, 2007. For full disclo-
sure of SFAS 158, see Note 8. The table below reflects the impact of
adopting the provisions of SFAS 158 on the components of the
Consolidated Balance Sheet as of September 30, 2007:
Before After
Application of SFAS 158 Application of
SFAS 158 Adjustments SFAS 158
Other Assets $ 194.7 $ 6.5 $ 201.2
Total Assets 3,546.5 6.5 3,553.0
Other Current Liabilities 608.9 5.4 614.3
Other Liabilities* 423.9 (19.7) 404.2
Total Liabilities 2,913.4 (14.3) 2,899.1
Accumulated Other
Comprehensive Income 26.0 20.8 46.8
Total Shareholder’s Equity 633.1 20.8 653.9
Total Liabilities and
Shareholder’s Equity $3,546.5 $6.5 $3,553.0
*Includes Deferred Income Tax liability adjustment of $15.7.
No other new accounting pronouncement issued or effective
during the fiscal year has had or is expected to have a material
impact on the Consolidated Financial Statements.